Progress on this problem: I removed the distributor and disassembled it following the instructions found at this url

https://www.volvoclub.org.uk/faq/VolvoB230ShaftSeal/DistributorShaftSeal.html

I did not have much difficulty driving out the pin holding the dog to the shaft, so I was lucky. One of the key instructions from the volvoclub site was that the drive dog is offset to one side of the shaft and the offset should be to the side of the shaft where the slot is machined to lock the rotor in place. I did not realize it was offset when I took it apart and had a 50/50 shot at putting it together wrong. Reinstalling the distributor to the motor was eased by putting the old rotor back on and turning it slightly to align the drive dog with the recess.

I ordered the seals from FCP Euro and after cleaning the distributor up with 320 grit paper put it back together and reinstalled it in the motor. New Distributor cap and rotor too. I also changed the oil separator and flame trap, figuring that built up crankcase pressure might be causing the oil to get into the distributor. The shaft seal disintegrated as soon as I touched it, so it was way overdue. I also cleaned the throttle body and replaced the hose to the brake booster which looked like it was ready to crumble.

Started it up and it ran ok, idled a bit fast 1200 rpm. But for sure cured the no spark on No. 2 cylinder. I believe I should clean out the IAC, should have done that while I had the throttle body out. When I drove it about 20 miles tonight, it ran well but idled a bit rough at stoplights. Hopefully an IAC cleaning will smooth the idle a bit more.
Thanks for the help! Greg